Wrap: Finance minister updates media on economic initiatives

MOSCOW, February 9 (RIA Novosti) - Russian Finance Minister Alexei Kudrin said Thursday at a news conference in Moscow that the government planned to lift all limits on capital movement in 2006 in a bid to improve the investment climate in the country.

"Russia will take a key step toward capital liberalization and will cancel all restrictions on capital movement," the minister said, adding that all investments in Russia would have no limits and would not be restricted by deposits.

Kudrin said the country could emerge as one of the world's biggest recipients of foreign investment in the next few years.

"In three or four years, Russia could rise to fifth or seven place [among recipients of foreign investment]. Russia is becoming an attractive country with a predictable economy," the minister said. Russia is currently the world's 12th largest recipient of foreign investment.

Kudrin said Russia had been expanding its share of the world economy, adding that he believed this trend would continue.

The minister estimated Russia's GDP growth at 5.7%-6% in the next three years if oil prices stood at around $46 per barrel, adding that the estimated figure could be higher if oil prices increased.

He cited the Economic Development and Trade Ministry, which forecasted the average Urals price at $51 per barrel, but said it could come in higher at $55.

However, Kudrin warned that high oil prices would cause a major currency influx to Russia, where monetary supply exceeded demand already. He said the Central Bank would have to stabilize the ruble rate.

Kudrin also touched on Russia's foreign debt, saying the country planned to repay $11-12 billion of the remaining $21 billion of its debt to the Paris Club of Creditor Nations ahead of schedule in 2006.

The debt will not be repaid in full, because Germany had issued bonds to cover a part of Russia's $21-billion debt.

"Germany will not agree to early repayment, but we hope for an agreement on the rest of the sum," Kudrin said.

The minister said he hopes Russia would reach mutually beneficial agreements with members of the club after some Russian partners were reluctant to agree to early repayment because "the debt was obtained with very high interest - much higher than today's average interest".

Kudrin said the country had joined an international initiative to relieve the debts of Heavily Indebted Poor Countries (HIPC), proposed by the WB and IMF.

Kudrin said the other G8 members, of which Russia currently holds the rotating presidency, had already implemented the program to write off the debt of the world's poorest nations.

On Monday, Kudrin said Russia intended to completely forgive the debts of 16 of the world's poorest countries.

"The total of the possible write-off is $688 million," he said, adding that this mainly related to African countries, including Benin, Tanzania, Zambia and Guyana.

Kudrin also said that the G8 finance ministers meeting on February 11 in Moscow would discuss the multilateral cancellation of poor countries' debt to the International Monetary Fund, the World Bank and the African Development Bank, worth $37 billion.

However, the capital of these international organizations has to be increased in order to continue implementing programs to support poor countries, he said, adding that Russia would put forward proposals on the procedure and timeframe for increasing the capital of the international financial organizations at the meeting in Moscow.

The finance minister, who heads a supervisory body at Russia's largest diamond producer Alrosa, also said the state monopoly on diamond sales could be abolished before the government increased its share in the company's authorized capital to 50%+1, the decision adopted by the body February 3.

"These are two parallel processes and there is no strict connection between them," Alexei Kudrin said. "Therefore, the state monopoly on diamond sales and on quotas could be canceled earlier."

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